While rental properties have been a profitable investment for many, recent changes in the housing market could affect those rental investments. Investors should take note and adapt if they want to continue being profitable, according to an executive in the real estate industry.
In a recent Huffington Post online article
, BuyPD CEO Ryan Poelman points to several factors that are prevalent in today’s economy that could turn a once-profitable real estate investment into a less attractive deal now. The factors include:
Economic factors and attractive mortgage rates are spurring more people to buy instead of rent
More rental properties exist in some areas, resulting in falling rent prices
Inflation, as well as higher taxes and costs
The good news is that you can take action to protect your investments and keep your profits up. Poelman suggests several measures:
Raise the rent when the lease expires
Consider a rent incentive if you have a vacancy
Make inexpensive cosmetic updates on the house that could warrant a rent increase
Think about selling the property if it makes sense
If you’re concerned about the taxes on profits from a rental property, it’s time to look into how investing with a self-directed IRA could potentially eliminate that worry. You can invest in real estate and many other non-traditional assets using funds from a self-directed retirement account. The tax-deferred or tax-free status of a retirement account would still apply to your investments, potentially reducing or eliminating the tax burden that you’d face with investments outside of a self-directed IRA.
Get more details on how a self-directed IRA could affect your investing – set up a free, no obligation one-on-one IRA Checkup
with on one of our Senior Account Executives.